Q Drinks

Q Drinks

The big get bigger and bigger and bigger

Today just three multinational corporations, Coca Cola, Pepsi, and Dr. Pepper Snapple, control more than 90 percent of the US soda market. And most of their products taste lousy and are lousy for you. The pride, craft, and innovation that accompanied the rise of bottled soda have all been lost. How did this happen?

The short story is that the industry matured and consolidated, all the while competing on marketing and price rather than quality. A longer story begins with a Georgia businessman named Asa Candler, who purchased Coca Cola's original formula from John Pemberton for $2300. Candler immediately broadened the company's business model - he decided to keep the syrup production in house, but would franchise the bottling across the US and relentlessly advertise the product. The results were staggering: by 1904, with an advertising budget equal to 25% of the company's total income, Coca Cola was the most recognized brand in America. This generated more and more sales, which Candler reinvested in advertising and marketing, which in turn created even more sales and gave him his pick of franchisees.

The only way to compete with Coke was to scale up. Pepsi's path was slightly different - Charles Guth bought the original formula for Pepsi Cola and its small network of franchised bottlers from North Carolina pharmacist Caleb Bradham. Guth was the president of Loft Incorporated, which owned a large chain of candy stores and restaurants known for their soda fountains. These fountains immediately started serving Pepsi Cola, and like Candler, Guth rapidly expanded his network of franchised Pepsi bottlers, investing his ever-growing earnings in massive advertising and marketing.

But don't think things were equal - entering World War II, the Coca Cola Company was by far the market leader. And this lead was further cemented during the war when it got the contract to supply the US military. This meant a bottle of Coke would be the happiest part of millions of homesick soldiers' days. And that Coca Cola would get an exemption from the sugar rationing imposed by the government, which allowed all the Cokes sold in the US to be made with sugar while many of their competitors were forced to use less tasty substitutes.

By the time World War II ended, Coke had a 60% market share. And with America booming, more and more Americans had change in their pockets to spend on treats like soda, especially if the soda companies could keep their prices down. America was also enjoying "Better living through Chemistry." Out went the costly real ingredients and in came "artificial and natural flavors" made in bulk in laboratories. More cost effective packaging quickly followed. In 1957 the glass bottle was first replaced with the much cheaper aluminum can, which in 1973 was in turn supplanted by the even cheaper Polyethylene Terephthalate ("PET", or as it's better known, plastic) bottle. While cheaper, neither maintain the flavor or carbonation of soda as well as a glass bottle.

The final straw was a system of sugar tariffs and quotas imposed by the US Government in 1977 that significantly raised the cost of imported sugar (the price of sugar in the US is now twice the global price). Since sugar was often their largest ingredient, the soda companies quickly took notice. And by 1984 both Pepsi and Coke had replaced the sugar in their recipes with High Fructose Corn Syrup, a sweeter and cheaper substitute.

And before you knew it, soda tasted nothing like it did at its infancy, when each bottle was carefully crafted by small bottlers and a delight to drink. That is, until Jordan had one too many gin & tonics made with lousy tonic water and decided he needed to make something better.